What is CPQ?

A salesperson or customer assembles the product from predefined options; rules then check that the combination is valid and set prices, discounts and the quote. CPQ suits products with a fixed product model, such as a machine offered in variants of length, drive and finish. It is often linked to a CRM or ERP.

How does CPQ work in practice?

For custom work to drawing, CPQ has little to offer: a part the customer designed appears on no option list, and its cost follows from material, route, setups and time per operation. Building a configuration for a part that is ordered once rarely pays. A company with its own product line beside subcontracting can use CPQ for the catalogue and keep estimating for custom work separate, with the result as a line in the same quote. Parametric product families with fixed operations sit in between; there a rule set with formulas can work.

What is CPQ often confused with?

CPQ is not an estimate: an estimate starts from the drawing and works out time and cost per operation, CPQ starts from a list of options and works with prices and rules set up beforehand. Nor is CPQ an instant quote: an instant quote prices an uploaded model with fixed rules for a limited set of processes, while CPQ works with a configured product model.